My friend has inherited a property and sold it at probate value so will have no capital gains tax to pay.
What I'm unsure about and have found conflicting answers is to whether it should appear on his tax return or not. The HMRC website says if there's no tax to pay then don't report it but the self assessment help pages says if you dispose of an asset over £43,000 then you need to enter it upon the return.
What do others do?
Replies (8)
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Does youR friend complete a tax return?
If yes, then enter the sale on the capital gains pages. If not, then no need to report to HMRC.
Pre-empt enquiry
Since you are completing a tax return anyway, it is not much extra effort to include the gain. Doing so makes HMRC aware that your client has sold the property. They have become very active on checking the Land Registry in recent years. If you don't report the sale at all, there is a risk that they will enquire why it hasn't been reported, wasting your time in correspondence getting them to close that enquiry. Best to avoid the enquiry being opened in the first place.
Check the facts
I think before giving your friend advice you should make sure of the facts. Did your friend actually inherit the property and then sell it? If so why did his sister deal with the sale?
It could be that your friend inherited from his mother's estate which included her house but that the house was actually sold by the executors of her estate and your friend merely inherited money - hence the sister's involvement as (joint?) executrix.
Probably
That's the most likely scenario. That's what executors are supposed to do, realise the estate assets, settle liabilities, including inheritance tax, and distribute the rest.My friend has confirmed that the land registry records never went into his and his sisters name so would you say we can assume that the executors sold the house and distributed the money and therefore it doesn't need to go on the return at all?